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Chapter 9 student F 2010 - CHAPTER 9 PROPERTY ACQUISITION...

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CHAPTER 9 PROPERTY ACQUISITION & COST RECOVERY
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Property, Plant, Equipment Capitalize the cost of assets with a useful life of more than one year on the balance sheet rather than expense the cost immediately Why?? Exceptions?? §179 Additional (or Bonus) depreciation 2008 and 2009
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Cost Recovery Cost recovery or depreciation: tangible assets Amortization: intangible assets Depletion: natural resources Basis in an asset is reduced by the amount of cost recovery that is allowed or allowable
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Basis Considerations Original basis of an asset?? Repairs vs Improvements Lump sum purchase?? Lump sum purchase with goodwill??
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Basis Considerations Inherited Property FMV of the asset at decedent’s date of death Exception: if alternate valuation date (6 months after date of decedent’s death) elected, basis is FMV on such date Can only be elected if value of gross estate and estate tax liability are lower than at date of death Holding period??
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Basis Considerations Gift Property May be dual basis Gain basis Donor’s adjusted basis (carryover basis) Holding period? Loss basis lesser of FMV at the date of gift or the donor’s adjusted basis Holding period?
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Basis Considerations Gift Property If FMV < donor’s basis on the date of the gift Gain basis = ???
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